LONDON (Alliance News) - Ambrian PLC Thursday said the subdued commodity market has continued into 2015 as its pretax profit fell in 2014 despite revenue increasing as its margins were squeezed by increased competition, and said it is diversifying the business in terms of products, geographic location and customers serviced.
The commodity trading and investment company reported a smaller pretax profit in 2014 of USD1.1 million compared to a USD4.1 million profit in 2013 as its net revenue fell to USD7.8 million from USD13.9 million.
That net revenue breaks down to USD2.88 billion in revenue with cost of sales coming in at USD2.87 billion compared to 2013 when revenue was USD2.56 billion with costs totalling USD2.55 billion.
"Although we did not repeat the strong performance reported in 2013, we continue to develop our newer business lines and broaden our geographical footprint. When market fundamentals improve, we expect to capture the upside benefits of the efforts put into developing our sourcing and customer relationships," said Chairman Robert Adair.
Ambrian also made a USD784,000 gain from its investment portfolio from a USD1.5 million loss in 2013 whilst administrative expenses fell to USD7.5 million from USD8.3 million. Those administrative expenses include exceptional items, which totalled USD904,000 in 2014 compared to nil a year earlier. The exceptional items relate to advisory fees in connection with the combination of assets of Ambrian and Consolidated General Minerals PLC during 2014.
Profit before tax and exceptional items was therefore just over USD2.0 million, compared to USD4.2 million a year earlier.
Ambrian said despite trading higher volumes of copper and expanding its non-ferrous business lines, lower volatility and increased competition reduced the company;s margins in its merchant activities. To respond to this, the company is concentrating on diversifying the business in terms of products, geographic location and customers serviced.
Ambrian also intends to pursue selective investments in the resources sector to support and diversify its trade flows and revenue base.
"During the first quarter of 2015 trading conditions in most commodities continued to be subdued following on from similar conditions in the last quarter of 2014," said Ambrian. "The opening of the Taiwan office in February 2014 and the Singapore office in late 2014 has allowed the company to gear up its expansion into other metals. The intention is to continue to expand both in terms of geography and commodities in the current year."
"We also intend to grow traded volumes and, more significantly, will continue to diversify our product lines into areas commanding higher margins, the target being to position the group to generate a greater "base load" profitability," the company added.
Ambrian shares fell 2.4% to 10.00 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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